- AUD/USD declines even after China’s Manufacturing PMI beat expectations as the figure stil remains in contraction region.
- Uncertainty surrounding trade/politics also exert downside pressure on the pair.
- Traders also remain cautious ahead of AU CPI, FOMC.
Even after witnessing better than forecast manufacturing activity data from the latest customer China, AUD/USD drops to 0.6865 during early Wednesday.
China’s July month official Purchasing Managers’ Index (PMI) data flashed mixed signals as the Manufacturing PMI grew past-49.6 market consensus to 49.7, still in the contraction region, whereas Non-Manufacturing PMI lagged behind expectations of 54.5 to 53.7.
Given the latest negative repercussions of Chinese media to the US President Donald Trump’s tweet downsizing the odds of a successful trade deal, like always, the Aussie will have an additional pressure to bear unless any positive news/headlines lands from Shanghai.
Adding to the pair’s weakness could be the Aussie’s risky characteristics that grab fewer buyers during the times of political/trade uncertainty.
Market sentiment remains broadly capped as the US 10-year treasury yield seesaws near 2.06% by the press time.
Having witnessed initial reaction to activity data from largest customer, the Aussie traders will now shift their attention to Q2 Consumer Price Index (CPI) numbers that are expected to flash a rise of 0.5% versus 0.0% on a quarterly basis whereas Reserve Bank of Australia’s (RBA) Trimmed Mean CPI might also expand to 0.4% from 0.3% on the QoQ format.
Following that, investors will be keenly watching the US Federal Reserve’s monetary policy decision whereas in the US central bank is mostly anticipated to announce a quarter percent rate cut.
Technical Analysis
While mid-June tops around 0.6885 and early-month low near 0.6910 can keep limiting the quote’s near-term upside, 21-day exponential moving average (EMA) level of 0.6960 will continue exerting downside pressure on the prices. Alternatively, 0.6830/25 area comprising bottoms marked in June 2019 and early 2016 hold the keys for the pair’s slump to January month low of 0.6684.
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